Schmidt joined former New Mexico Gov. Bill Richardson in a delegation that also urged North Korea to put a moratorium on missile launches and nuclear tests that have prompted U.N. sanctions and sought fair treatment for a detained American citizen there.
"As the world is becoming increasingly connected, their decision to be virtually isolated is very much going to affect their physical world, their economic growth and so forth," Schmidt told reporters at the Beijing airport after returning from the four-day trip. "It will make it harder for them to catch up economically. We made that alternative very, very clear.
"The government has to do something. It has to make it possible for the people to use the Internet. It is their choice now. It's in my view time for them to start or else they will remain behind."
The unusual trip, which was not sanctioned by the U.S. government, has been criticized for appearing to hijack U.S. diplomacy and boost Pyongyang's profile after North Korea's widely condemned rocket launch to put a satellite into space last month.
Schmidt has been a vocal proponent of Internet freedom and openness and is publishing a book in April with Jared Cohen, director of the company's Google Ideas think tank, about the power of global connectivity in transforming people's lives, policies and politics.
Cohen doesn't typically accompany Schmidt on Google-sanctioned trips, and his inclusion in the delegation was a sign that the two men may have been primarily interested in gathering more material for their book.
The delegation toured technology facilities in North Korea, where most people have access only to a computer intranet that does not connect with the World Wide Web, and met with students and North Korean officials.
The State Department has criticized the trip as "unhelpful" at a time when the U.S. is rallying support for U.N. Security Council action against Pyongyang. Schmidt advised President Barack Obama during his 2008 election campaign and was once considered a potential candidate for a Cabinet-level appointment. Schmidt has repeatedly said that he has no plans to leave Google for a government job.
State Department spokesman Peter Velasco said earlier from Washington that he did not believe the delegation had been in contact with U.S. officials since they arrived in Pyongyang.